US created 261,000 jobs in Oct, vs 310,000 jobs expected

Key Points
  • The U.S. economy added 261,000 jobs in October, the Bureau of Labor Statistics reports.
  • The unemployment rate fell to 4.1 percent as labor conditions returned to normal following the storm-weakened September, it says.
U.S. economy adds 261,000 jobs in October
U.S. economy adds 261,000 jobs in October

The U.S. economy added 261,000 jobs in October and the unemployment rate was 4.1 percent as labor conditions returned to normal following the storm-weakened September.

However, the jobs-creation number was considerably below Wall Street expectations of 310,000. The tick lower in the unemployment rate came against expectations it would hold at 4.2 percent.

A broader measure of joblessness that includes discouraged workers and those at work part -time for economic reasons fell sharply, from 8.3 percent to 7.9 percent after being at 9.5 percent just a year ago.

In addition to the October growth, an initially reported decline of 33,000 for September was revised up to a gain of 18,000. August's count also was revised up from 169,000 to 208,000.

"Today's report, albeit a little bit mixed, is still a relatively decent number. It still points towards the positive trend that we've seen in payroll growth over the last several months and the last couple of years actually," said Tony Bedikian, head of global markets at Citizens Bank. "In general, the economy is moving along, though a little softer than many market participants anticipated."

The report comes as the Federal Reserve is expected to hike its benchmark rate another quarter point in December. However, the central bank has been wary over the lack of inflation, particularly in the average hourly earnings component of the nonfarm payrolls count.

Wage growth again disappointed, with earnings actually off by 1 cent an hour and showing just a 2.4 percent annualized gain.

Indeed, the biggest gain in employment came from the hospitality industry, with jobs at food and drinking establishments up by 89,000, reflecting a storm-related rebound. Professional and business services contributed 50,000 to the total while manufacturing added 24,000 and health care increased by 22,000.

"Despite coming in below expectations, this is the type of report the Fed was looking for to sign, seal, and deliver a rate hike in December," said Mike Loewengart, vice president of investment strategy at E-Trade Financial.

In all, employment in the manufacturing sector has increased by 156,000 since President Donald Trump's election in November 2016. Trump has made blue-collar growth a priority of his economic agenda.

The household survey, which canvasses homes and asks how many people are at work, provided less encouraging data. It showed the total employment level falling by 484,000 in October after surging by nearly a million in September. Those counted as not in the labor force also surged by 968,000, to 95.4 million.

Though falling short of hopes, the Bureau of Labor Statistics report coincides with other data indicating economic momentum. Gross domestic product grew by 3 percent in the third quarter, according to the government's first estimate, and CNBC's tracker shows the fourth quarter on pace to rise 2.8 percent.

Stock market futures initially nudged higher following the report while government bond yields edged lower. Stocks were mixed by midmorning.

Get the market reaction here.